Simon Coveney (Cork South Central, Fine Gael) | Oireachtas source

Amendments Nos. 3 and 4 to Government amendment No. 68. They are basically shortening the timeframe by which the RTB has to come back to the Minister when it is asked to look at the data and the numbers for an area. They are basically trying to speed up the process of getting areas designated. I have accepted a number of amendments in the Seanad in regard to this broader legislation and also the spirit of a number of other amendments on Committee Stage. To be consistent with that, I believe we can accept these two amendments, which make sense.

Opposition amendment No. 5 to Government amendment No. 68 proposes to make the criteria for designation as a rent zone area either (a) or (b), rather than (a) and (b). The criteria for determining whether an area is a rent pressure zone were arrived at following consultation with experts in the field and a careful examination of patterns in rental markets around the country, as well as long-run historical trends. The objective was to capture areas where rents have been increasing consistently over a period of time and also where they are already at a high level above the national average.

The combination of the two criteria is a key element of the rent predictability measure being put forward by the Government. Using one criterion alone would not necessarily capture the areas which require rent predictability measures such as this. For example, it is not uncommon for rental markets to display once-off quarterly characteristics that do not necessarily signify a long-term trend. For example, university and college areas often show spikes in September. Therefore, as well as exceeding the national average rent, the Government believes that rents in an area must also show a consistent pattern of annual increases of 7% or more in four of the last six quarters.

This is to take account of the reality that rents in some parts of the country, although increasing, are still well below the long-run average for those areas. Having regard to this, I do not propose to accept this amendment. For similar reasons, I do not propose to accept Opposition amendments Nos. 6 and 7 to Government amendment No. 68, which change the criteria from four of six quarters to two of six quarters, and remove the requirement that the rent be above the national average rent respectively.

Opposition amendments Nos. 8 and 9 to Government amendment No. 68 relate to the three year designation period. An area may be designated as a rent pressure zone for a maximum period of three years. This amendment provides that three months before the end of that period the housing agency shall review that area and make a report to the Minister as to whether the time period for the designation of the area as a rent pressure zone should be extended. Increasing supply is the ultimate solution to rising rents in most places. The Government's proposal for rent pressure zones is intended as a time bound intervention to be made while the market recovers to something resembling equilibrium and the supply side measures contained in Rebuilding Ireland take effect, getting us up to the required 25,000 to 30,000 units per annum by 2019-20. I do not expect that there will be any necessity to provide for further orders after the three year period has expired because additional supply, combined with three years of rent predictability will have eased the pressure in the rental market in the area concerned. I do not, therefore, believe this amendment is necessary and I do not propose to accept it.

Opposition amendment No. 12 to Government amendment No. 55, and Nos. 10 to 12, inclusive, 13, 15 and 16 to Government amendment No. 68 either propose to add additional areas to the list of local authority areas that will be designated as rent pressure zones immediately on enactment of this Bill or to state that the State is a rent pressure zone. I understand the motivation behind these amendments, but the only areas which currently meet the criteria set out under section 24A(4) are Cork city and the four Dublin local authority areas. This does not mean, and should not be taken to mean, that the Government is ignoring rent pressures in other areas. Due to low rents in rural areas of some local authority areas having a drag effect on averages, prices may not have reached rents in excess of the national average. This is why we are putting in place a mechanism to enable smaller geographical areas, the local electoral areas, to be examined against the criteria. Once the Residential Tenancies Board, RTB, has commenced its work, and it has, in looking at the data on a more granular level, it is very likely that areas that have the highest level of demand, for example, areas surrounding Dublin, and the urban areas of Galway, and possibly Limerick and Waterford, will be designated as rent pressure zones within those areas. I have asked the RTB to make this examination an absolute priority. I have given a commitment that by the end of February the areas I have mentioned already will have data that will allow me make decisions. I want to ensure that the process is streamlined, responsive and we will ensure that, once an area meets the qualifying criteria, designation as a rent pressure zone will be swift. Therefore, I do not propose to accept these amendments.

Opposition amendment No. 14 to Government amendment No. 68 provides for an avoidance of doubt provision to state that the rent increase in a first rent review cannot exceed the maximum rent increase limit. I believe that is already provided for and therefore I do not accept this amendment.

Finally, Opposition amendment No. 17 to Government amendment No. 68 proposes to delete section 24C(1)(a). I do not propose to accept this amendment which would move tenants in rent pressure zones back to annual rent reviews immediately. The current 24 month period should be allowed to continue and all subsequent reviews should take place on an annual basis where the tenancy is in a rent pressure zone. That is why when many people have been quoting the numbers in recent days I have taken issue with them because people are assuming that, as we are allowing for an annual maximum rent increase of 4% over the next three years, there will be a 12% or 12.25% rental increase. That is not true for most people. It is a misrepresentation of the facts because many people are not due a rent review for another 18 months or year, or six months. Only after that period when the restrictions are imposed and at the next review the maximum rental increase is up to 4% that we begin to see that over the next three years there will not necessarily be three reviews. In most cases it will be two. It is not accurate to say that everybody will be asked to pay a 12% increase or 12.25% increase, if it is compounded, in rent. It is simply not true.

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